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A slitter for sheet sandpaper owned by Abbotsford Abrasives (AA) requires regular main costing $7500 per year. Every five years it is overhauled at a
A slitter for sheet sandpaper owned by Abbotsford Abrasives (AA) requires regular main costing $7500 per year. Every five years it is overhauled at a cost of $25 000. The tenance original capital cost was $200 000, and an additional $25 000 in non-capital expenses was incurred at the time of installation. The machine has an expected life of 20 years and a $15 000 salvage value, and it will not be overhauled at the end of its life. AA pays taxes at a rate of 45 percent and expects an after-tax rate of return of 10 percent on investments. Recalling that the CCA rate for production equipment is 20 percent, what is the after-tax annual cost of the slitter
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